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Mangala’s Economics

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I found Karma inexplicable that such an effective Politician was not only taken away prematurely, but we were also denied the right to pay our respects as well.

In recent times, as Foreign Minister he ensured that our International relations were at their best ever.

His period as Finance Minister saw us register with long overdue financial discipline, two consecutive years of primary revenue surpluses in 2017 and 18, for the first time after over fifty years .

In a brief stint as Sports Minister he inspired Vijay Malalasekera’s Interim Committee to such an extent that we recorded our most successful years in International Cricket, with Integrity unquestioned !

Above all he was a very decent, humble, honest and civilised human being and was blessed in consequence with a Midas touch as his tenures will confirm.

We can all stand proudly and say “Here indeed was a true Statesman”

So Let us console ourselves that fate took him prematurely, to enable an early rebirth through his good Karma, and a path thereafter in Politics that will see him as the Head of State of a New Sri Lanka within forty years !

A prosperous era when educated Parliamentarians will adorn that revered Institution, with Country,, ALL its people and self in that order as their priorities and a Parliament that will conduct its affairs with dignity making its people truly proud

“Mangala” deserves that posthumous reward.

In the Interim Dear Sir, Rest in Peace.

A Grateful Citizen

 

by Deshal de Mel

When Mangala Samaraweera took over the Finance Ministry portfolio in May 2017 Sri Lanka was preparing to face some of its most challenging years in macroeconomic management. 2018 was the year that the government had to make its highest ever domestic debt repayments (LKR 922 billion in capital repayments of domestic debt. For context, in 2020 the domestic debt capital repayment was LKR 456 billion). In 2019 Sri Lanka had to make its highest ever foreign debt repayments (LKR 575 billion foreign capital repayments in 2019. In 2018 the foreign capital repayment was LKR 315 billion and in 2020 it was LKR 505 billion).

In addition to managing an economy where annual debt service payments (LKR 2,022 billion in 2019) were higher than government revenue (LKR 1,891 billion in 2019), in mid-2017 the country was in the midst of its worst drought in 40 years. Agricultural incomes had been decimated and the economy was also hurting from devastating floods in other parts of the country. The fragile coalition between President Maithripala Sirisena’s SLFP and Prime Minister Ranil Wickremesinghe’s UNF was also beginning to show the first signs of cracks as a two year honeymoon period was over. Amidst these challenges Mangala’s time was largely focused on firefighting these critical issues. That did not stop him from taking on some of the most important macroeconomic reforms during his two year stint as Minister of Finance.

Addressing Sri Lanka’s Fiscal Weakness

1996 was the year that Sri Lanka won the cricket world cup but it was also the last year that Sri Lanka had a government revenue to GDP ratio of over 20% (it was 20.1%that year and was consistently above 20% over many years prior to that). Since then revenue had declined dramatically, reaching a nadir of 11.6% in 2014. This was amongst the lowest government revenue performances in the world. Sri Lanka’s recent public expenditure ranging between 17% and 20% of GDP was not high by global standards. As of 2020 Sri Lanka’s government expenditure comprised largely non-discretionary spending including salaries and wages (6% of GDP), interest (6% of GDP), welfare and transfers (4% of GDP). Therefore there is very little room to meaningfully reduce expenditure in a practical manner.

The main causative factor behind Sri Lanka’s consistently high budget deficits was its weak revenue base. Sri Lanka also has an extremely regressive tax structure. As at 2017 approximately 82% of tax revenue was collected as taxes on goods and services and 18% as taxes on income and other direct taxes. Typically taxes on goods and services (indirect taxes) fall disproportionately on the poor. A family would pay the same tax on milk powder regardless of whether their household income is Rs. 50,000 or Rs. 500,000. This was how over 80% of Sri Lanka’s taxes have been collected. This reliance on taxes on goods and services has also contributed to driving up the cost of living as the tax component of prices continues to increase.

Mangala’s simple principle for taxation policy was that the government should wherever possible reduce upfront taxes and costs that disincentivize the commencement or establishment of business. However, once a business is established and profitable, it should pay its fair share in income taxes. This was the opposite to the reality at the time — Sri Lanka’s taxes had hitherto been front loaded into indirect taxes such as cess, PAL, NBT, and VAT — whereas income taxes are low and corporates enjoy a range of income tax holidays. As a result there is typically a high cost of entry into industry and limited competition among established players.

Taxes on incomes have been low for several reasons including open-ended tax holidays, weak collections reliant on self-declaration, and other leakages. The Inland Revenue Act of 2017 was drafted in order to address as many of these issues as possible.

In general the new legislation intended to shift to a rule based tax structure, moving away from discretionary policy which leaves room for leakages and graft. The IRA had important positive impacts on tax collection. Even though the legislation came into effect in April 2018, the full impact of the legislation would only be seen in November 2019 when the 2019/20 filing is completed. The results were impressive. There was a 44% growth in income tax collection in 2019 in spite of major shocks to the economy, tax payers registered with the Inland Revenue Department in 2018 was 986,684 and by 2019 it had increased to 1,505,552. Most importantly, in 2019 the ratio of direct taxes to indirect taxes shifted to 75% to 25% from 83% to 17% in the previous year. Even though marginal, this was an improvement in Sri Lanka’s highly regressive tax structure.

Primary Surpluses

One of Mangala’s key fiscal objectives at MoF was to achieve a primary surplus in the budget. Since independence, Sri Lanka had achieved a primary surplus only in 1954, 1955, and (marginally) in 1992. A primary surplus in the budget occurs when revenue exceeds expenditure minus interest cost. It is the measure of fiscal management that is truly within the control of the Minister of Finance since the past interest cost is payment for past sins. When a primary surplus is achieved it means the government’s revenue exceeds its non-interest expenditure. A primary deficit means the government has to borrow even to finance interest which is undesirable from a debt sustainability perspective. In 2017 Sri Lanka had a primary surplus of Rs.2 billion and in 2018 Rs. 91 billion (0.6% of GDP).

2017 (5.5% of GDP) and 2018 (5.3% of GDP) also saw two of the lowest budget deficits in Sri Lanka’s recent past. In 2016 as well Sri Lanka limited its budget deficit to 5.3% and in 2013 the deficit was 5.4%. However prior to that the only time the budget deficit dipped below 5.3% was in 1977 (4.5% of GDP).

A critique of this achievement is that even though the government had primary surpluses in 2017 and 2018, and the overall debt to GDP decreased in 2017 (from 79% to 78% of GDP), debt to GDP increased to 84.2% in 2018. The reason behind the increase in debt to GDP in 2018 was because of the depreciation of the currency that year due to the global taper tantrum early in the year as the Federal Reserve raised interest rates and the constitutional crisis later that year. When currency weakens, the rupee value of external debt increases, causing the debt to GDP ratio to increase, in spite of the gains made in real fiscal management, which is what can be controlled by the Minister of Finance.

There is also a perception that the decline in GDP growth rates was due to enhanced government revenue measures. However, quarterly GDP growth from Q1 2015 to Q3 2018 averaged 4.3%. This was keeping in line with the average growth levels of 2013 (3.5%) and 2014 (5%). Just as the economy was recovering from the droughts of 2017, this momentum was lost due to the constitutional coup in October 2018 which dragged down Q4 2018 growth to 2.1%. The resulting capital flight and forex reserve sales to defend the rupee resulted in negative market liquidity and higher interest rates that carried on well into 2019, compounded by the Easter Sunday attacks, dragging down 2019 growth as well.

Fuel Price Reform

In early 2018 the hopes of shifting to a market based fuel price formula were fading. This was potentially a major reform given the significant fiscal burden created over the years due to mis-pricing of petrol and diesel and weak balance sheet management by CPC. These factors combined to result in CPC running up debts over LKR 300 billion, mostly placed with the state banks, creating a high-risk fiscal combination. Anchoring retail fuel prices to the global market price (with adjustments for taxes, distribution costs, storage costs, finance costs, and profit margin) would help eliminate additions to the existing fiscal burden of CPC. When global prices rise, the domestic fuel price would rise, when global prices fall, the domestic price would fall. Even if the government chose not to increase retail prices in line with global price shifts, a transparent and publicly available formula would create more visibility on the fiscal costs of such a policy.

Like all challenging reforms, ideally the fuel price formula should have been introduced early in the political cycle, market prices were also trending upwards by 2018. In May 2018 the formula commenced implementation. On the 10th of every month the retail price of fuel will be adjusted to reflect the latest global fuel price (Singapore Platts was the anchor used). The timing could not have been worse, and communication could have been a lot better. Global fuel prices had started sky-rocketing from mid-June and peaked at over US$ 80 per barrel in October from the US$ 50 range leading up to May. Naturally the public associated the fuel price formula with rising prices at the pump. Had the formula been implemented a year prior, the public would have seen prices decline and stabilize prior to increasing. But alas, this was not to be, and the formula was scrapped by the new administration.

Trade Liberalisation

As at end 2019 Sri Lanka’s rank in Trade Openness was 140th out of 141 in the Global Competitiveness Index. In spite of being the first country in South Asia to liberalise in 1977, Sri Lanka’s trade protection levels have increased over the last couple of decades. In the 5 years from 2014 to 2018, the average percentage of government revenue collected at the border was around 49%.

The increased layers of taxes on imports results in three key impediments;

i) These import taxes are a significant burden on consumers. The effective import tax rate of several basic consumption products from milk powder to biscuits goes up to 100%.

ii) Import taxes erode competitiveness as domestic firms receive significant protection from global competition leading to less incentive for innovation and dynamism and thus hinders long term productivity improvements — the true driver of economic growth.

iii) Several intermediate imports have high import taxes — including numerous construction materials. This drives up costs for all industries, eroding competitiveness of almost all Sri Lankan enterprise. It also makes Sri Lanka less attractive a destination for FDI.

In Sri Lanka a lot of border taxes take the form of paratariffs. The standard import duty is customs import duty (CID), however since CID is eliminated in Free Trade Agreements (FTAs) with India and Pakistan, successive Sri Lankan governments have added in layers of paratariffs such as cess and the Ports and Aviation Levy (PAL).

In the 2017 November budget it was decided to commence the elimination of most of these paratariffs. Mangala championed this initiative since he recognized the potential positive implications it would have for the economy in the long term. Some of the treasury officials were less enthusiastic, because there would naturally be a short term revenue loss as a result of removing these tariffs and also because it would result in severe lobbying by protected industries, seeking to retain their walls of protection.

Whilst some in the ministry wanted to see tariffs eliminated almost entirely in a big bang reform move, it was necessary to allow time for domestic industry to adjust to this significant change. It was eventually decided that the best approach would be a five year phase out of most paratariffs. This would make the revenue impact easier to absorb — revenue from PAL and cess amounted to around 1% of GDP. To start with though the 2017 November budget would eliminate paratariffs on 1,200 or so of the least sensitive tariff lines. The impact would not be material, but Mangala felt it would be a robust signal — and also give additional time for industry to make adjustments to the envisaged operating environment. In the March 2019 budget the next phase of para-tariffs was eliminated, and a Trade Adjustment Programme was introduced to provide budgetary support for domestic sector entities that face adverse adjustment costs due to exposure to greater global competition.

Welfare Reform

Another important initiative of the Ministry of Finance under Mangala Samaraweera was the effort to streamline welfare payments. One of the first things Mangala asked me was how we can move away from a system of price controls on essential items to provide relief to the public. He understood that price controls are not sustainable since they are poorly targeted, they tend to result in shortages and erosion of quality when market prices exceed the administered price. And of course they are subject to constant abuse. He was very keen that we look at introducing a system where relief is provided to the needy through cash transfers — his favourite example was Bolsa Familia, Brazil’s cash transfer programme.

Of course this required a robust system of identification and targeting of those who are deserving of such support. This would apply not just to those who were of lower income levels, but also those with disabilities, the elderly and infirm, and those vulnerable to and victims of natural disasters. Sri Lanka’s existing system of welfare distribution, Samurdhi, was woefully inadequate in terms of targeting. Samurdhi had vast numbers of undeserving recipients who benefitted from the scheme and more worryingly, large numbers of deserving citizens who were excluded from the scheme. The World Bank provided technical support in designing such a targeting mechanism and after a lot of work the new targeting criteria was finally gazetted in June 2019. The mechanism consisted of objective, verifiable criteria including education levels, housing conditions, income, electricity consumption, assets, and illnesses. If fully implemented this mechanism of targeting, combined with the use of digital payment systems, would have enabled a transparent and efficient scheme of providing welfare to those who most deserved it, without resorting to the economic inefficiencies of indiscriminate price controls. Unfortunately this initiative too did not make it beyond the election cycle.

Monetary Policy Legislation

Another potentially game changing reform was the new Monetary Law Act. This legislation was championed by the Central Bank under Indrajit Coomaraswamy, and Mangala supported it to the hilt, even at the tail end of the political cycle. The MLA was designed to provide greater independence to the Central Bank, coupled with accountability measures for the Monetary Board. It would create disciplines around deficit financing (money printing) and establish the legal framework for inflation targeting. These measures would have imposed limitations on some of the most problematic interactions between the monetary and fiscal authorities, that have over the years led to Sri Lanka’s fiscal profligacy, deficit financing, all resulting in ballooning debt and monetary instability. Mangala was not a subject expert, but perhaps his best quality was to listen to the experts and formulate his judgment based on the technical advice that he received. The new Monetary Law Act also did not see the light of day.

2018 Constitutional Coup

It had been a very heavy few weeks in the lead up to the 2019 budget to be presented in early November 2018. The 26th of October was a Friday. The Active Liability Management Bill, a landmark piece of legislation that would allow Sri Lanka to buy back or otherwise manage its lumpy liabilities to smoothen out its repayment obligations, was passed in parliament in the afternoon. This piece of legislation had faced stiff opposition by President Sirisena. We had finished the final draft of the budget speech and had sent it for the final technical annotations. The end of a long week and several long months. As I drove out of the treasury building at around six pm I noticed barricades being hurriedly stacked up near the Presidential Secretariat. I didn’t pay much attention and carried on to catch up with some friends.

About forty five minutes in everyone was getting messages, stating that Mr. Mahinda Rajapaksa is being sworn in as Prime Minister at the Presidential Secretariat. The initial reaction was disbelief since that act would in itself be unconstitutional. I made a couple of phone calls and it was clear something extraordinary was going on so I rushed back to the treasury. Most of the staff was gone by this time but the Minister and a couple of the private staff were still around. Nobody could quite believe what was going on. Having thought things through Mangala wanted to send out a tweet at 8.30pm saying “The appointment of @PresRajapaksa as the Prime Minister is unconstitutional and illegal. This is an anti-democratic coup #LKA.” I asked him if he’s sure he wants to use the word coup. It was a strong word and would have important ramifications. He thought for a few seconds and replied in the affirmative, saying that a coup is exactly what is going on.

The economy took a beating over the subsequent two months. Foreign investors took flight and exited their positions in GoSL rupee denominated treasury securities. Rs. 75 billion worth of foreign investments in government securities was sold in just 2 months, creating massive pressure on the currency, causing the rupee to crash from 172/US$ to Rs. 182/US$ between October and December 2018. The currency was already weak due to the taper tantrum in the early part of the year which hammered all emerging economies. When capital flows started reversing in Q4 and other emerging economies saw a recovery, Sri Lanka was in the midst of the coup and associated capital flight.

During this time the government sold US$ 1 billion worth of reserves in just 1 month as reserves declined from US$ 7.9 billion to US$ 6.9 billion. These were valuable reserves the government had been building up in preparation for the substantial external debt repayments in 2019. More importantly Sri Lanka’s credit rating was downgraded by all three rating agencies in November 2018. On the 30th of November 2018 the yield on the January 2019 ISB had reached 10.7% from 5.6% on 26th October. This meant that Sri Lanka was effectively locked out of global capital markets on the cusp of having to settle over US$ 5.3 billion in debt repayments in 2019, including a US$ 500 million ISB in early January 2019. It was heart breaking for Mangala watching this unfold from the sidelines given all the efforts that he had and the team had taken to keep the economy stable to meet the 2019 debt repayments amidst the global bond market volatility in 2018.

As the economy deteriorated into December it became clear that the adverse impacts of the coup would be long lasting. Due to the sales of US$ 1 billion worth of reserves by the Central Bank, liquidity in the domestic rupee market also reduced dramatically. The market was short LKR 100 billion in the overnight money markets and this pushed up domestic interest rates dramatically as well. Prior to the coup, the 1 year treasury bill was in single digits at 9.5% as at end September 2018, having been at 10.5% when Mangala became Finance Minister. During the coup interest rates shot up to 11.25% by mid-December. The market was LKR 100 billion liquid short till at least April 2019, keeping interest rates elevated and hurting economic growth significantly in 2019. The high interest cost added to Sri Lanka’s debt concerns as well by driving up the cost of domestic debt.

Managing External Debt in 2019

When the Supreme Court verdict came through in 13th December and Mangala returned as Finance Minister, there was a lot of work to be done. Firstly there was no year end budget to authorize payments for 2019, and Sri Lanka had lost access to global capital markets to finance the country’s highest foreign debt repayments in 2019. A quick vote on account was passed by end December, and the next step was to somehow regain access to global capital markets to make sure we can refinance debt repayments. It was unfortunately too late for the January 2019 bond which we had to settle out of the already diminished reserves. Soon afterwards Mangala led a team to Washington to meet with the IMF and re-instate and re-negotiate Sri Lanka’s programme. In spite of Mangala losing his suitcase and D.C. being having a snow day as soon as we arrived, the team met with Christine Lagarde and the technical team led by Manuela Goretti, and after some tough negotiations we were able to set the programme back on track with some important concessions. The external goodwill towards Sri Lanka was palpable, and there was nobody better than Mangala to leverage this to the country’s best advantage.

Over the next two months Mangala had to put together a delayed budget for 2019. This was a particularly tough budget since it was an election year and there were expectations of additional concessions, but at the same time it was critical that the fiscal position would inspire the confidence of global capital markets in order to regain access to external financing. Mangala’s last budget was able to meet both criteria. The March 2019 budget included Programmes such as Gampereliya, a rural infrastructure programme which was seen as a means of providing targeted fiscal impetus to improve cash circulation at the rural level, whilst investing in productive infrastructure leveraging on rural value chains. The enhanced Enterprise Sri Lanka programme was a means of reducing cost of capital, one of the key impediments to SMEs in the country. This was a strategy to provide a targeted reduction in interest rates to productive investments without a general reduction in interest rates. A general reduction in interest rates at the time would have led to an acceleration of capital flight post-coup, and would have further de-stabilized an already volatile external sector. Mangala had some other wonderful ideas in that budget, including providing scholarships for the best performing Advanced Level students to study at any top global university that they qualify for admission.

The budget was also able to satisfy global markets and Sri Lanka regained access to global capital markets. Immediately as the budget was passed, the Central Bank led the process of raising the required International Sovereign Bonds (ISBs) to settle the upcoming debt payments in 2019. However, whilst settling the immediate debt, Mangala and Indrajit Coomaraswamy were also cognizant of the fact that leading into two election years (2019 presidential and 2020 parliamentary), Sri Lanka may face risks in retaining global capital market access to finance debt repayments in 2020 and 2021. Accordingly, Mangala and Indrajit made a conscious decision to raise an additional US$ 2.4 billion dollars worth of ISBs in mid-2019 to build up reserves to US$ 7.6 billion by end 2019 to tide over a volatile couple of years ahead. Whilst today many politicians criticize the previous government’s international sovereign bond strategy, it is the reserves built through the US$ 4.4 billion ISBs raised in 2019 that have been used to settle Sri Lanka’s external debts in 2020 and 2021. Sri Lanka would have already defaulted if not for Mangala and Indrajit’s decision in mid-2019.

True Patriot

There are of course many things that I’m sure Mangala wishes went differently. He wanted to update and upgrade legislation for Customs and Excise — to reduce subjectivity, discretion, and shift to a more rules based framework for both pieces of legislation. He wanted to do move faster on trade reform but the political economy of late stage reform made such intentions difficult to fulfil. He was also keen to invest more in education, health, and reconciliation. He wanted to bring in legislation to address microfinance and informal finance related household indebtedness. There was a lot more than could be done within an interrupted 2 year tenure.

I and many others will miss Mangala not so much for his achievements and efforts as Finance Minister. Nor for his work towards reconciliation from the Sudu Nelum movement to date, for his work in liberalization of the telecom sector in the late 1990s, for his work with the UDA in Colombo’s initial beautification. I will miss a human being of immense courage, who stood for what is right regardless of societal or political compulsions. A man of integrity, conviction, and humility. A patriot in the true sense of the word.

Deshal de Mel Economist based in Sri Lanka



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Features

‘The endangered speeches’

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by Usvatte-aratchi

That was the title of a short review of a book named Language City written by Ross Perlin. The review was written by Johnson, who usually writes to The Economist on language and appeared in The Economist of April 13. A group of scholars in New York City found that the citizens of that mega-city spoke 700 languages, roughly 10 percent of all languages alive now all over the world. That is probably true probably of London and Paris as well, who additionally have had an imperial past. What a boon, a veritable Tower of Bable.

Ross Perlin wrote about six languages, so spoken. One is Seke in Nepal, squeezed between Nepali and Tibetan. Wakhi in Central Asia is among Chinese, Persian and Russian. Nahuatl spoken by 1.6 million people in Mexico is under threat from Spanish. N’ko spoken in West Africa is in competition with French. Yiddish, spoken in southern Germany and later in New York, is giving way to German and English. Perlin picked up these languages from among the 30 that he came across in New York City. Little wonder that that medley irked Donald Trump, disturbed about his conviction by a New York jury.

Johnson went on to talk about 7,000 languages that are alive now. That number has been discussed for about 30 years now. The largest group among them is in Africa. Their survival strength lies in their isolation from more aggressive invaders. Another large cluster is in Papua New Guinea, where hemmed in between tall and thickly forested mountains, each group in a valley speaks a language unknown in the other. As these languages come into contact with more aggressive languages, they lose out and eventually die when fewer than ten people habitually use that language.

As Islam spread in North Africa, its language, Arabic replaced the local languages. Over centuries, Arabic in each country developed its own variation which is hard for a person in another country to understand. At regional intercountry meetings, officials go back to Koranic Arabic, which is not intelligible to the people at large. Latin, which was used by a small sliver of the population in medieval Europe, lost ground to rising vernaculars.

It remained supreme in learning and the church for several centuries, well into the 19th century. The vernaculars of the powerful rising nations replaced Latin in Europe and established themselves in colonies that the imperial countries conquered or populated. This is especially interesting because we find a language well-established for centuries, losing ground to upstarts. The special feature was that the new languages were vehicles of new knowledge that people found available to them. Martin Luther translated the bible into German in 1522. King James’s authorised version of the Bible in English appeared about a hundred years later.

The consequences were momentous. A contrasting feature emerged more recently when well-established languages carried new knowledge and threatened the survival of old vernaculars. Samskrt, a language that carried forward knowledge far and wide (Java, Cambodia) until about the 13th century, came to rest in backwaters, yielding place to the brash newcomer, English. An Indian scholar working on a problem in Panini’s work (Panini was a Samskrt grammarian in the 6th century.), found the solution in distant Cambridge while working with a professor, who was Italian.

The earliest of these ‘conquering’ languages were Portuguese and Spanish which subjugated indigenous languages in South America. Amazingly, people who inhabited that landmass from Manitoba in the north to Tierra del Fuego in the south mostly lost their languages and now use 4 Western European languages: Portuguese, Spanish, French (All Romance languages) and English. ‘South of the border’ lies Latin America! However, some indigenous languages survived, especially in remote parts of Brazil, in parts of Mexico, Peru and in Reservations in North America.

Chinese, a source of fundamental innovations in the world did not find domicile in any cultures overseas, except among ethnic Chinese living overseas (hua quiao) in many parts of the world. We owe the discovery of gunpowder, the mariners’ compass, silk production, ink, and printing to Chinese ingenuity. The significance of these discoveries to the eventual rise of Western civilisation is immense. The wisdom of Kong Fut Ze (Confucius) and Lao Tze and Sut Tzun notwithstanding and that it is the first language of some 1.3 billion people, Chinese is not one of the leading international languages.

Sinhala, an ancient language continuously used by most people on this island, has changed much in the last hundred years. Read Guttila Kavya Varnana written by Pandit W. F. Gunawardena in 1920(?) and a book written by Sarachchandra, Gunadasa Amarasekera or W. A. Abeysinghe, a hundred years later and you realise the emergence of a new usage. The beginnings of that change came with Kumaratunga Munidasa and Martin Wickremasinghe and with the growth of mass literacy spread among all Sinhala users. More recently, the widespread use of Sinhala on radio and television has spread a new patio incapable of expressing none but the gross inanities that occupy the minds of their creators.

There wasn’t only a change in usage but also in the knowledge that the new usage carried. Again, the pioneer was Martin Wickremasinghe, soon followed by Kumaratunga Munidasa. Sinhala is in a battle against English for survival. English with its close cousin across the Atlantic has been at the forefront of forces that change our economies and ways of living. (Think of blue jeans.) Most talented young people begin to work in English at the end of secondary school. They often leave for other countries.

None of these bodes well for the growth of a vigorous language that not only carries new knowledge but also engages in discovering new knowledge. We must not only revel in kav silu mini kusa dava but also write a new vavuluva. We must not only marvel at Jetavanaramaya and Jayaganga but also take pleasure in writing a programme for a robot capable of complex new tasks. Celebrating mav basa annually is no substitute for the inventive use of a language.

‘Alut alut dae notanana jatiya lova no nangi
Hinga kaema bari vuna tena lagi gaya mara gi ’ Virit Vakiya.

That is no less true of a language than of a people.

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Features

Lester , Underrated : Akkara Paha

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Akkara Paha

By Uditha Devapriya

Akkara Paha (1969) contains perhaps the saddest and most poignant finale in any of Lester James Peries’s films. Ajith Samaranayake distilled it brilliant in his tribute to Madawala S. Ratnayake, who wrote the novel.

Here were dreamy young antiheroes seemingly without a purpose in life, fascinated by their own sexual urges but gripped by a sense of futility and self-pity.

Sena, the protagonist of Akkara Paha, is one such antihero. Poor but intelligent, sharp but sensitive, he finds himself in a totally different environment after securing a scholarship to an elite school in Kandy. Unaccustomed to life in the city, he strikes up a friendship with a girl at his boarding. The friendship later grows into a romance.

Eventually, he realises his limitations: he is far more intelligent than anyone in his class, but a bounder in their scheme of things. He responds to this by rebelling against his own inheritance, first by abandoning the girl he fell in love with in his village, and then by neglecting his studies and pining after the girl at the boarding.

This recklessness costs him everything and brings him no consolation. He does all he can to impress the girl, Theresa, played by Janaki Kurukulasuriya, even raiding into the family till and getting what little money his sister, played in her second film role by Malini Fonseka, has saved to buy Theresa expensive perfumes. Theresa initially humours him. Yet after a while she loses interest in him and begins an affair with a rich cousin.

His sexual awakening leads Sena to much disappointment, and he soon abandons his studies and tries his hand at manual employment. He finds a job at a sawmill. Yet having been shielded from hard work by his father – who has staked everything on him getting a middle-class education and securing a white-collar job – he becomes sick and is sent to hospital. It is there that his family discover what he has done with his life and to his future.

The ending unfolds in the backdrop of these tragedies, but it is not a tragic ending. Spurred by his father’s indebtedness, Sena’s family have by now moved to a State colonisation scheme. Sena’s sister has fallen in love with a neighbour. The two of them decide to marry. Meanwhile, Sena rekindles his romance with his village sweetheart, Sandha, and in doing so returns, in a manner of speaking, to the world he abandoned.

The final scene, played against a slow, haunting poem sung by Amaradeva, underscores this process of departure and return, of abandoning the past and returning to it. Sena and Sandha wave goodbye to Sena’s sister and her husband. The two of them then walk back, heads bowed down, uncertain of their future, but somewhat hopeful.

Rathnayake’s novel wraps up differently, with the sister talking about Sena with their mother after her wedding, and her revealing that he intends to marry someone. The mother is distraught: he has already ruined his life for a girl, and is worried he may ruin what’s left of it for another. She changes after hearing who his intended bride is: Sandha.

By only hinting at Sena’s reconciliation with Sandha and the possibility of their marriage, Lester Peries ends the story on a more poignant, subtle note. It is not like the ending in Golu Hadawatha, where the spurned lover forgives the girl who rejected him, or in Nidhanaya, where the husband finally realises his love for his wife. What makes Akkara Paha one of Lester’s better films – and one of his more sensitive works – is the lack of certainty about Sena’s fate. Ratnayake is more definite, concrete. Lester is anything but.

Akkara Paha was the second of a trilogy of films that Lester Peries did for Ceylon Theatres. The trilogy, taken as a whole, remains a landmark in the Sinhala cinema, because on no other occasion did a prominent director, of his standing, get such a lucrative offer from a leading film company. Until then the theatres had pitted themselves against his work: according to his biographer A. J. Gunawardena, they refused to lend his team lighting equipment for Gamperaliya because of fears that his work would undermine theirs. By the latter part of the decade, however, things had begun to change.

Ceylon Theatres’ arrangement with Lester showed what could be achieved if the resources of commerce were put in the service of art. Yet of the three films he did – the other two being Golu Hadawatha (1968) and Nidhanaya (1970), the latter acknowledged as his best work – Akkara Paha remains curiously neglected and underrated. Though it travelled to the West – it was one of seven films by Lester screened at the Museum of Modern Art in New York, where among other things he met the formidable Pauline Kael – and won praise from foreign critics, it never got the reputation it deserved at home.

What makes this more curious is the film’s achievement. In no other work of his does Lester probe into the lives of the Sinhalese peasantry with as much poignancy as he does in Akkara Paha. While the film does exude what his critics saw as his bourgeois humanist tendencies – a charge levelled with equal vigour at his contemporary Satyajit Ray, who at the time was making his Calcutta trilogy, set against the backdrop of the Naxalite uprising in the city – it does not romanticise, still less glamourise, its subject.

Lester

All that, in turn, underscores an even more remarkable achievement. In the history of the Sinhala cinema, Akkara Paha may have been the first film to depict the contradiction between the material ambitions and the lived experiences of the Sinhala Buddhist rural youth. Lester does not really explore these tensions, or predict their unravelling in later years, particularly in April 1971. But compared with his other two Ceylon Theatres films – in particular Golu Hadawatha, which again delves into the Sinhala middle-class – Akkara Paha engages with the discontent and frustrations of the rural youth.

We do not really know what Lester’s response to the April 1971 insurrection was. What we do know is that by that point, a new and more radical group of filmmakers had begun to criticise him for what they saw as his bourgeois humanism.

Around this time the leftwing Bengali filmmaker Mrinal Sen was berating Satyajit Ray on similar grounds as well. Yet whereas Ray – who was as representative of the Bengali bourgeoisie as Lester was of the Sinhala bourgeoisie – made the Calcutta Trilogy – which underscored his sympathy for the radical youth in light of the Naxalite insurgency – Lester went his own way. At the time of the 1971 insurrection, while the likes of Dharmasena Pathiraja were making Ahas Gawwa, he was directing Desa Nisa.

In that regard, I see Akkara Paha as his most radical work yet, more radical than Yuganthaya, which as Pathiraja pointed out for me in an interview years ago was marred by a somewhat jaundiced view of politics. The film predicts the radicalisation of the Sinhala youth though it steps away from engaging with that completely. Like Para Dige, Pathiraja’s best work and in my view his most underrated, the protagonist does not face a clear future at the end: like the protagonist in Pathiraja’s film, he and his fiancée stare into the distance, although unlike in Para Dige they turn back and return home.

It is this act of turning back which, at one level, may have won for Lester censure from his more radical critics. I disagree with those who portray Lester as a conservative artiste. But that does not undermine their fundamental point: that at a time of great political ferment and artistic rebellion, his films seemed to be out of step with the times. Perhaps it is this led critics to perceive a drop in quality in his later work, starting from Desa Nisa. That this drop transpired immediately after his Ceylon Theatres trilogy is telling.

Whatever the reason may have been for the film’s lack of success, Akkara Paha marks an important point in Lester’s career. It is poignant, haunting, tragic, and redeeming. Between the romanticism of Golu Hadawatha and the nihilism of Nidhanaya, it occupies a twilight world. Admittedly, the story is optimistic, and in its ending, somewhat naïve: the novel is more concrete and direct. But it is suffused with a humanism that transcends its limitations. Above all, it is vintage Lester James Peries: life-affirming, ever hopeful.

Uditha Devapriya is a writer, researcher, and analyst who writes on topics such as history, art and culture, politics, and foreign policy. He is one of the two leads in U & U, an informal art and culture research collective. He can be reached at udakdev1@gmail.com.

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Religious nationalism suffers notable setback in India

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People casting their votes in the recent Lok Sabha poll in India

Democratic opinion the world over could take heart from the fact that secularism is alive and well in India; the South Asian region’s most successful democracy. While it is indeed remarkable for Indian Prime Minister Narendra Modi to win a third consecutive term as head of government in India’s recent Lok Sabha election, what is of greater significance is the fact that the polls featured a resounding defeat for religious nationalism.

Consequently, India’s secular credentials remain intact. Secularism, which eschews identity politics of all kinds, including religious nationalism is, after all, a cornerstone of democracy and secularism has been a chief strength of India. The defeat of religious nationalism, particularly in Uttar Pradesh, is a triumph for not only the democratic forces of India but for their counterparts the world over.

It was plain to see that the Bharathiya Janata Party under P.M. Modi was going the extra mile to placate Hindu nationalist opinion in Uttar Pradesh and outside through the construction of an eye-catching Ram temple in the state, for example, but the vote-catching strategy has visible failed as the polls results in the state indicate. For, the number of seats won by the BJP in the state has shrunk dramatically. In fact, the BJP was resoundingly defeated in the very constituency where the temple was constructed.

Constructive criticism of religious nationalism should not be considered an indictment of the religions concerned. Hinduism is one of the world’s most profound religions and it would sustain itself and thrive regardless of whether vote-hungry political parties champion its cause or otherwise. However, the deployment of any religion in the acquiring and aggrandizement of power by political forces calls for criticism since it amounts to a gross abuse of religion. Religious nationalism is an example of such abuse and warrants decrying in democratic states.

Unfortunately, religious nationalism is rampant in South Asia and it is most alive and well in Sri Lanka. And to the degree to which religious nationalism thrives in Sri Lanka, to the same extent could Sri Lanka be considered as deviating from the cardinal principles and values of democratic governance. It is obligatory on the part of those posing as Sri Lanka’s national leaders to reject religious nationalism and take the country along the path of secularism, which essentially denotes the separation of politics and religion. Thus far, Sri Lanka’s political class has fought shy of taking up this challenge and by doing so they have exposed the country as a ‘facade democracy’.

Religion per se, though, is not to be rejected, for, all great religions preach personal and societal goodness and progress. However, when religious identities are abused by political actors and forces for the acquiring and consolidation of power, religious nationalism comes to the fore and the latter is more destructive than constructive in its impact on societies. It is for these reasons that it is best to constitutionally separate religion from politics. Accordingly, secularism emerges as essential for the practise of democracy, correctly conceived.

The recent Indian Lok Sabha poll was also notable for the role economic factors played in the determining of its final results. Once again, Uttar Pradesh was instructive. It is reported that the high cost of living and unemployment, for instance, were working to the detriment of the ruling BJP. That is, ‘Bread’ or economic forces were proving decisive in voter preferences. In other words, economics was driving politics. Appeals to religion were proving futile.

Besides, it was reported that the opposition alliance hit on the shrewd strategy of projecting a bleaker future for depressed communities if the BJP ‘juggernaut’ was allowed to bulldoze its way onward without being checked. For, in the event of it being allowed to do so, the concessions and benefits of positive discrimination, for instance, being enjoyed by the weak would be rolled back in favour of the majority community. Thus, was the popular vote swung in the direction of the opposition alliance.

Accordingly, the position could be taken that economic forces are the principal shaping influences of polities. Likewise, if social stability is to be arrived at redistributive justice needs to be ushered in by governments to the extent possible. Religious nationalism and other species of identity politics could help populist political parties in particular to come to power but what would ensure any government’s staying power is re-distributive justice; that is, the even distribution of ‘Bread’ and land. In the absence of the latter factors, even populism’s influence would be short lived.

The recent Indian Lok Sabha elections could be said to have underscored India’s standing as a principal democracy. Democracy in India should be seen as having emerged stronger than ever as a result of the poll because if there were apprehensions in any quarter that BJP rule would go unchallenged indefinitely those fears have been proved to be baseless.

‘One party rule’ of any kind is most injurious to democracy and democratic forces in India and outside now have the assurance that India would continue to be a commodious and accommodative democracy that could keep democratic institutions and values ticking soundly.

Besides the above considerations, by assuring the region that it would continue with its ‘Neighbourhood First’ policy, India has underscored her ‘Swing State’ status. That is, she would take on a leadership role in South Asia and endeavor to be an inspirational guide in the region, particularly in respect of democratic development.

As for Sri Lanka, she has no choice but to be on the best of terms with India. Going forward, Sri Lanka would need to take deeply into consideration India’s foreign policy sensitivities. If there is to be an ‘all weather friend’ for Sri Lanka it has to be India because besides being Sri Lanka’s closest neighour it is India that has come to Sri Lanka’s assistance most swiftly in the region in the latter’s hour of need. History also establishes that there are least conflicts and points of friction among democracies.

However, identity politics are bound to continually cast their long shadow over South Asia. For smaller states this would prove a vexatious problem. It is to the extent to which democratic development is seen by countries of the South as the best means of defusing intra-state conflicts born of identity politics that the threat of identity politics could be defused and managed best.

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